Subhash Chandra Opposes NCLT's Five-Member Bench As Creditors' Appeal Remains Pending In NCLAT

(MENAFN- Live Mint) Zee Group founder Subhash Chandra on Wednesday opposed the National Company Law Tribunal (NCLT)'s decision to constitute a five-member bench to hear his personal insolvency case afresh, questioning the legal basis for expanding the bench after three members gave differing views on his repayment plan.

Chandra's counsel argued that Section 419(5) of the Companies Act, which deals with differences of opinion among tribunal members, did not give the NCLT the power to constitute a five-member bench.

“The scope of Section 419(5) is very limited... It does not give power to the NCLT under the IBC or company law to form a five-member bench”, Chandra's counsel argued.

Chandra's counsel also opposed the move to hear the entire case again. He argued that the earlier order approving the repayment plan could not be set aside. He also questioned the five-judge bench, which had stayed the third judicial member (Nilesh Sharma)'s order approving the repayment plan.

The National Company Law Appellate Tribunal (NCLAT) kept the creditor's challenge to Subhash Chandra's repayment plan pending. The appellate tribunal decided not to dispose of the appeal for now, allowing the lenders to keep their challenge alive as the NCLT is hearing the matter afresh after constituting a five-judge bench.

After hearing the arguments, NCLAT decided to hear the matter on October 7.

On Tuesday, a newly formed five-member NCLT bench led by president Justice Anupinder Singh Grewal clarified that the order of member Nilesh Sharma, delivered on 25 August, could not be given effect because it did not constitute the majority view of the tribunal.

A day earlier, the appellate tribunal had agreed to hear an urgent plea by several creditors challenging the NCLT Delhi bench's approval of the repayment plan proposed by Zee Group founder Subhash Chandra.

Minutes after the NCLT special bench proceedings ended, solicitor general Tushar Mehta appeared before the NCLAT for creditors including LIC Housing Finance, HDFC Bank and Union Bank of India.

Mehta asked the NCLAT to consider whether its intervention was needed now that the NCLT had stayed the earlier order.

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The case concerns Chandra's liability as a personal guarantor for loans taken by companies linked to the Essel Group and the Zee Group.

In February, a two-member bench of the NCLT differed on whether his repayment plan would be binding on dissenting creditors. Sharma, who was brought in as the third member, approved the plan and held that it would be binding on dissenting creditors.

Government officials told Mint earlier that about ₹2,574 crore of the claims were related to loans for which Chandra had given personal guarantees when they were taken.

Chandra has said he did not personally borrow the money and that his ₹31.79 crore net worth formed the basis of his repayment proposal.

There is also a dispute over the voting process.

Also Read | NCLT stays Subhash Chandra's ₹6.5 crore repayment plan

A creditor alleged that the resolution professional had wrongly admitted the claims of five entities-Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors-which together held 61.78% of the voting share and helped approve Chandra's repayment plan.

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